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The following is a post by Marc Chandler, head of Brown Brother Harriman’s Currency Strategy Team. For more of BBH’s currency views, visit the website here.
Canada reported a somewhat disappointing Q4 09 current account data today, but this is not sufficient to change our preference to buy Canadian dollars on weakness.
The current account shortfall [...]

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Back in March when the US Government felt compelled to bail out out Citigroup, Tracy Alloway over at FT Alphaville noticed a curious thing – Citigroup had effectively been nationalized.
No, they were not seized by government, but Citi was controlled by government.  The Feds had 36% of shares outstanding, which in many cases is [...]

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The following is the currency outlook released today by the Brown Brothers Harriman Currency Strategy team:
Swine flu and concerns about US banks may be hitting the headlines but, the European banking sector remains a threat for the euro zone. Indeed, ECB President Trichet, speaking in NY yesterday, highlighted the fact that the European banking sector [...]

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After a good run-up in the last month, the Mexican Peso is getting crushed in the currency markets today.  How much of the pullback is a result of the news regarding Swine Flu and how much is technical, due to the prior run up, is hard to identify.  Nevertheless, the outbreak will have a negative [...]

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This comes from Win Thin, a senior currency strategist at Brown Brothers Harriman:
Mexico President Calderon is now saying that Mexico stands ready to take a $30-40 bln IMF credit line. This was a surprise to us, and we view this as a negative for Mexico since no country until now has gone to the [...]

The political realities of solving a financial crisis have often meant circumventing legislative approval to meet the exigencies of a particular situation.  This was certainly the case in 1995 during the so-called Tequila Crisis in Mexico.  And I believe it is the case again today in 2009.  Before I go into how this applies to what is presently happening in the Obama Administration, I thought an example from 1995 would be illustrative.

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This analysis comes via Brown Brothers Harriman (I have bolded a few lines):
Mexico’s central bank is widely expected to cut its overnight rate by 25 bp today. That would bring it to 7.25%. Last month it delivered a 25 bp rate cut too. The market had expected a 50 bp cut and [...]

I plan to visit Mexico early next month as I do at least one or twice every year. This year I question what awaits me as evidence that Mexico’s economy and civil order is imploding mount. The latest strike against Mexico comes in its now escalating trade war with the United States.

On Wednesday I posted an article that pointed out a largely positive review by Morgan Stanley of Mexico and their economy. Having noticed a negative bias in the article, I amended it to reflect the tone originally given in the Morgan Stanley piece. That said, I would like to point out a Bloomberg video clip and another from the Wall Street Journal, which illuminate some of the pitfalls of investment there. Below are some additional links that should shed more light as well.

While everyone seems to be shedding assets, Citigroup included, BBVA seems to be doing relatively well. If they are as strong financially as they indicate despite Spain’s crashing economy, antitrust concerns aside, Banamex would be a good target for increasing their North American footprint.